Sick pay shake-up: what does it mean for your wallet?

The Labour government is set to introduce the Employment Rights Bill tomorrow, which will include a new universal sick pay policy.

This means that many more employees will be entitled to claim sick pay from the first day of their employment. But while this may sound beneficial, it could potentially prevent increases in salaries, particularly for lower-income employees.

What is the new sick pay policy?

Under the proposals of the new Employment Rights Bill, employees will no longer have to wait until the fourth day of illness to get statutory sick pay (SSP).

The current rules state that workers are entitled to £116.75 SSP for up to 28 weeks, but that they “must have done some work for your employer”, and this can depend on their probationary period. However, the Labour government announced it would be scrapping these rules for fairer policies for employees.

“Nobody should be plunged into hardship when they become sick. But millions face a financial cliff edge if they get ill,” Paul Nowak, general secretary of the Trades Union Congress (TUC), told Yahoo News UK.

“Labour’s New Deal for Working People will fix this problem,” he added. “With sick day support from the first day of sickness, you will know that your family is protected. And you can take the time you need to recover.”

Additional measures in the bill include maternity leave rights, in which pregnant employees will have the right to give notice about maternity leave without the risk of dismissal. Certain zero-hour contracts and fire and re-hire policies are also set to be scrapped. 

Will the policy encourage businesses to prioritise healthcare?

With these new measures in place, businesses may have the opportunity to introduce preventative healthcare initiatives that could lessen ill health in the first place.

Sammy Rubin, CEO and founder of insurance company YuLife, commented: “Alongside the benefits for individuals, the proposed changes provide an ideal opportunity for businesses to redefine their approach to employee wellbeing. 

“Rather than being mostly reactive (i.e. considering how to respond should an employee fall ill for an extended period of time), businesses can be proactive and focus more on prevention by taking steps to bolster employees’ health and wellbeing in the first place, thereby mitigating the risk of many of the common causes of ill-health.”

Citing research statistics from Zurich, Rubin added that mental health is the primary cause of long term sick leave, being responsible for 44% of absences. He also added that as the UK economy lost £100 billion last year due to employee sickness, it is in a company’s “own interest” to invest in employee wellbeing.

“Technology can be a game-changer in this regard, as services like gamified apps now make the experience of everyday wellbeing activities fun, engaging, and competitive for employees,” he said. “Even micro-actions as small as a 10-minutes of meditation performed consistently over time can have a profound effect on employees’ stress and anxiety levels when encouraged by employers. At YuLife, we have seen that some 87% of our users have reported an improved level of wellbeing as a result of access to gamified wellbeing tools.”

Could the new bill affect your salary?

These new measures mean that employees on SSP could earn up to £33.36 extra from sick days, as they’ll be paid from the first day. 

However, businesses are concerned with the amount they’ll have to fork out for SSP, which potentially poses the risk of salaries not being raised in the future to compensate for it. 

Tina McKenzie, policy chair at the Federation of Small Businesses, commented: “Done wrongly, this bill could damage growth, wages and jobs. We need balanced regulations that protect workers without overwhelming the small businesses that drive job opportunities and are at the heart of local economies and communities in every part of the UK.”

Meanwhile, Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said that employers and small and medium-sized enterprises (SMEs) will “need reassurance that these proposals will be affordable and proportionate”.

“They are nervous about additional costs and restrictions, including how these new laws will impact their business operations,” she added. “Many businesses have limited access to HR resources and want to know what support the government will put in place to help them prepare and adjust to the changes.”

As the new bill rolls out, it remains to be seen how companies will balance the cost of the new SSP reforms. Ultimately, its success will depend on how well it is implemented and whether small businesses receive the necessary support to adapt to these new regulations without affecting salaries.